Unruh's political career began as an unsuccessful candidate for the California State Assembly during 1950 and 1952. He was elected as a member of the Assembly on his third attempt during 1954. During 1956, he was an unsuccessful candidate for Presidential elector for California as a Democrat. During 1959, he authored California's Unruh Civil Rights Act, which outlawed discrimination by businesses that offer services to the public and was a model for later reforms enacted nationally during the 1960s and 1970s. Unruh was Speaker of the California State Assembly from 1961 to 1969 and a delegate to Democratic National Convention from California during 1960 and 1968.

When he campaigned for State Treasurer during 1974, the post was considered insignificant.[2] Unruh's radio advertisements assured voters, "Make no mistake about it, I really want this job". Once elected, Unruh politicized the office. The Wall Street Journal noted he became "the most politically powerful public finance officer outside the U.S. Treasury".[2] California pension funds were a major source of revenue for Wall Street underwriting companies, and Unruh secured campaign contributions in exchange for doing business with them. The New York Times said he had gained control of "an obscure post whose duties had long emphasized bookkeeping. In characteristic fashion, he soon transformed the job into a source of financial and political power that reached from California to Wall Street."[3] Because as Treasurer he was ex officio member of many California boards and commissions, Unruh supervised "the raising and expenditure of virtually all the state's money and consolidated his influence over billions of dollars in public investments and pension funds".[3]

He served as State Treasurer from 1975 until his death from prostate cancer on August 4, 1987, 8 months into his 4th term as Treasurer. Unruh remains the second longest serving California State Treasurer, excepting only Charles G. Johnson (who served 33 years between 1923–1956). The University of Southern California Department of Political Science includes the Jesse M. Unruh Institute of Politics.

Unruh's nickname "Big Daddy" apparently derives from a character in the Tennessee Williams play, Cat on a Hot Tin Roof. Former Senate pro Tempore Jim Mills in his book "A Disorderly House" insists it was given to him by then-Assemblyman Don Allen, though perhaps from the play. Another version is that Unruh was given the nickname by Raquel Welch when the two were allegedly romantically involved, though Welch denies the claim.